Tuesday,  Sep 25, 2018,06:20 (GMT+7) 0 0
Conditional abolishment
By Son Nguyen
Thursday,  Aug 16, 2018,19:06 (GMT+7)

Conditional abolishment

By Son Nguyen

The deadline set by the Prime Minister for ministries and relevant agencies to make life easier for businesses by abolishing at least half of the business conditions and specialized inspections on imported commodities has passed, but the job is far from done. The reluctance to improve the country’s business environment, as pointed out by local media, mirrors a deep-rooted mindset among many agencies who seek to maintain their own management style rather than to switch to a pro-business approach.

The Government has long made administrative reform one of its top-priority mandates, and on the very first day of this year, the Government issued Resolution 01/NQ-CP to this regard. Minister-Chairman of the Government Office Mai Tien Dung stresses in Lao Dong newspaper that the Government with this resolution required all ministries and relevant agencies to review their legal documents and abolish those deemed business-unfriendly in this year at least 50% of as many as 5,905 business conditions contained in prevailing legal documents.

As ministries were dragging their feet, the Prime Minister last month issued Directive 20/CT-TTg demanding that the job be done by August 15. In the directive, according to Lao Dong, he clarified that the top leaders of ministries and agencies within their authority must issue new documents taking down business conditions and exempting imported commodities from specialized inspections by 50%.

And the ultimatum has passed for two days now, with little accomplished.

By the end of July, according to Nguoi Lao Dong, ministries and equivalent bodies had managed to exempt 616 imported commodities from specialized inspections out of 9,339 product lines, or a mere 6.6% of the total, while the number of business conditions is reduced by 15.2%, at 900 compared to the total number of 5,905.

At a review meeting organized by the Vietnam Chamber of Commerce and Industry (VCCI) on July 31 in Hanoi, according to news website VnEconomy, as many as 11 ministries presented their plans to scrap 50% or more of business conditions and specialized inspections. However, a close look at the plans shows those efforts are not genuine pro-business moves but a way to dodge the Government’s instructions.

Dinh Nho Bang, vice chair of the Vietnam Gold Traders Association, observed at the meeting that under the 2014 Investment Law, there were three business conditions regarding bullion business, namely trade in gold, production of gold bars including import and export of material gold, and production of gold jewelry. However, when the regulations were amended, there remains only one business condition on bullion business, but this single condition governs all gold business activities, meaning all business conditions in the previous legislation are now integrated into a single condition, so the change in reality is a bogus one.

As such, business conditions before and after changes to regulations, says VCCI, are almost the same, but ministries still enumerate such changes in their plans submitted to the Government.

There are also cases of business conditions being altered in terms of wording, but their contents are largely the same, or have barriers lowered a little. However, certain ministries still list them in the number of conditions being abolished, says VnEconomy. 

As of early this week, ministries had abolished 738 business conditions, or just a trivial 12.5%, according to news site Zing.vn. However, Minister Mai Tien Dung noted that ministries have announced plans to review and trim business conditions and inspections, but in reality, such plans have not been actualized. The minister, who is entrusted by the Prime Minister to supervise this administrative reform program, remarked on the news site that there are many instances of business conditions and commodity inspections being merged together, so “commodities must still undergo inspections as usual.”

Dau Anh Tuan, head of legislation at VCCI, observed in Nguoi Lao Dong that there are cases of State agencies abusing their power, putting forth business conditions beyond the need to control business risks. Most recently, businesses have decried regulations in Decree 87/2018/ND-CP on gas trade, compelling gas traders to write down unnecessary information such as the number of gas cylinders filled and distributed each day, and the serial numbers of such gas cylinders, while gas agents are also required to do the same. Gas traders say each of them distributes thousands of products a day, so the requirement is time-consuming, costly and unfeasible.

Pham Chi Lan, a veteran economist, suggests in the newspaper that there should be ways to fight business conditions being hidden in other conditions or in other forms that continue to discourage business.

VnEconomy cites data from VCCI to say that State agencies each year issue around 1,000 legal documents, most under the form of circulars by ministries, and around half of them relate to businesses. Therefore, there are risks of new business conditions springing up, despite the Government’s efforts to make the business environment liberal.

Business conditions and specialized inspections are the two biggest challenges for enterprises, and many such administrative procedures have persisted for years despite complaints and protests from the business community, according to Vietnamnet.

The news site refers to a decree on rice trading that contained numerous unreasonable provisions, but it still persisted for eight years before being abolished. “The time needed to remove the wrong rules is even longer than the average life span of a local enterprise,” says the news site. Commenting on this aspect, Pham Chi Lan says that even for positive changes in the legal corridor, the process normally last two or three years, a time length enough to kill off thousands of enterprises.

Ministries, according to local media, are racing against the time to accomplish their tasks assigned by the Prime Minister, but there are concerns such a process may not yield good fruit without greater pressure from leaders, says Nguyen Dinh Cung, head of the Central Institute for Economic Management, in Zing.vn.

From another angle, VCCI President Vu Tien Loc says in Zing.vn that the key to breakthroughs in this administrative reform is to hand over the job to independent agencies rather than allowing ministries to do this task themselves. Since ministers are assigning the administrative reform job to departments and divisions under their ministries, such subordinate agencies do not have the intrinsic incentive to do so.

“Those agencies with the licensing power will seek ways to retain their power,’ says Loc of VCCI. And thus, the abolishment of business conditions is also conditional: unless their power is intact.

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